Hashim Thaci: Some people believe his self-appointed government is behind the rackets

By Nicholas Wood in Kosovo

Since the end of the war in Kosovo last year, the economy has become increasingly black.

From petrol to cigarettes and the food, most of it involves organised crime.

Police in the province believe much of it is being controlled by the successors of the Kosovo Liberation Army (KLA).

There's no doubt some of the people we are working with have relations with the former KLA

Shaun Going, businessman

The Kukri is one of the most successful bars in Pristina, packed from morning to night with Albanians, members of the international community, and even Serbs.

But its success is proving a problem.

According to John Foreman, the bar's British owner, some people now want a share of its profits.

They include, he says, members of the Kosovo Protection Corp (KPC), the civilian force that replaced the KLA.

"I've been stopped by KPC officers, asked to pay the protection money, and I've refused point blank," Mr Foreman says.

The KLA: Seized control of most of the municipal authorities

"I think I'm one of the few bar owners that don't pay any protection at all. But my staff have been intimidated and money has been taken from my waiters. Every which way they can they have been trying to close my business down."

According to the United Nations police force in Kosovo, Mr Foreman's business is just one among hundreds across Kosovo that
are being targeted by protection rackets.

Some may be the work of random criminals. But investigators suspect that the self-appointed government set up by
the political leader of the KLA, Hashim Thaci, after the war may behind much of it.

Tax collection

More concrete evidence of money-raising can be found in the town of Gjilan in southeastern Kosovo.

Shops were approached last year by so-called 'tax inspectors' raising money for Mr Thaci's administration.

Three shop owners, who spoke to me on condition of anonymity, said they were all asked to make "contributions" depending on the size of their business.

Officially only the UN can collect taxes in Kosovo, work which has only just started.

Allegations that Mr Thaci's self-appointed administration has been collecting money are strongly denied by the local mayor, Ismail Kurteshi, who was appointed by Thaci
administration.

"Those who told you they are paying taxes, are
probably lying," Mr Kurteshi, who shares a post with a UN administrator, says.

Party links

But, according to UN police in Gjilan, more than $50,000 a week is being raised and taken to Mr Thaci's ministry of finance, a body that should have been dissolved at the end of January under an agreement reached with the UN.

Permission to prosecute the case has yet to be given by the UN's police commission.

There have been cases of protection rackets run by former members of the KLA, but this would be the first case directly linking such
activities to Mr Thaci's party.

This so-called "taxation" is not the only way Mr Thaci's administration are alleged to have been raising money.

At the end of the war, the KLA and its political wing seized control of most of the municipal authorities in Kosovo.

They then took control of all state-controlled enterprises, a fact Gjilan's mayor admits.

KLA connection

He said the reason was to protect the buildings from being looted by Serbs.

Nine months later, those businesses in Gjilan and many others throughout Kosovo remain in control of Mr Thaci's administration.

This dominance has enabled the Thaci family to benefit.

Last January UN police raided the apartment of Gani
Thaci, Hashim Thaci's elder brother, over a fire arms
incident.

Apart from finding an illegal weapon hidden
under a child's mattress, they found $250,000 in cash.

Gani told police the money was given to him by a Canadian construction firm working in Kosovo, Meridian Resources.

Meridian's Director Shaun Going maintains the fee was
closer to $60,000, but admits Gani was paid for "intermediary services".

Draft laws

Gani, he says, helped him seal deals with several companies that were taken over by Hashim Thaci's administration after the
war.

Mr Going maintains it is difficult to do business in Kosovo with out dealing with former members of the KLA.

"There's no doubt the former KLA people are well-positioned in business so there is no way of doing business in this country with out doing business with them or coming across them on a day-to-day basis," he says.

The UN administration is currently drafting laws that will review the ownership of companies seized by Mr Thaci's government and others.

One of the major concerns is the petrol industry.

Every week hundreds of tonnes of petrol and diesel are being smuggled across Kosovo's borders.

Neighbouring Montenegro has collected tax on some 130 million litres of diesel and petrol, destined for Kosovo, yet the UN administration
has collected taxes on only a small proportion of that.

Ian Fletcher a civil servant seconded by the British Government to the UN in Kosovo is trying make up the gap.

Working funds

He is also investigating just who controls the
business.

"It's clear these are much more than just
entrepreneurs," Mr Fletcher says.

"It is clear they have access to significant working funds and can afford to be building a very large number of petrol stations
at the moment."

In January, the UN's Director of Economic Affairs and Natural Resources in Kosovo,
Gerard Fisher, authorised the company to take control of 61 state-owned petrol stations in the province.
Many of these stations were already being run by other companies.

When approached by the BBC, Mr Fisher said
the decision was a "mistake, and had been taken under pressure."
He was reluctant to give any further explanation.

The order to hand over the petrol stations has now been rescinded.

The UN is expected to set up a new anti-organised-crime unit in Kosovo by the summer.

However, the confusion over control of the petrol industry has put a question mark over the UN's determination to deal with industries that Mr Thaci's administration took control of last summer.

Members of UN trade and industry department fear their proposals to review ownership of these companies may be significantly watered down.

This would leave the Thaci family and former members of the KLA with a significant hold over Kosovo's economy.